Oil prices surge as OPEC reportedly reaches deal to cut production by 1.2 million barrels

The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut supply by 1.2 million barrels per day (bpd) versus the current 33.64 million barrels, according to Bloomberg. Crude prices soared almost eight percent on the report.

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Bloomberg quoted a delegate in Vienna, asking not to be identified as the decision has not been made public yet.

As of 1:30pm GMT, Brent crude was trading nearly $4 higher above $50 per barrel, while US crude benchmark WTI was above $48.

The deal was reached after weeks of negotiations, as Saudi Arabia, Iraq and Iran fought for the very last barrel of production. This is the first coordinated cut from OPEC in eight years.

According to Bloomberg estimates, the deal allows Iran to increase production by 200,000 bpd from the current 3.7 million.

The agreement also expects non-OPEC countries to cut about 600,000 pbd.

Earlier, the biggest non-OPEC producer Russia, which is not participating in the Wednesday meeting, said it will freeze production at its current production level rather than cut.

Russia pumped 11.2 million bpd in October, the highest volume since the collapse of the Soviet Union.

Moscow’s unwillingness to cut production has reportedly dissatisfied several OPEC members.

OPEC has been under increasing pressure to curb output for the first time since 2008. Growing global oversupply has more than halved crude prices over the last two years.

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